bank rates

CD Rates Spiral Ever Lower In September

CD rates fell for the 23nd straight month in September, making it increasingly difficult for savers to keep up with inflation.

The average return on all five of the certificates of deposit we track fell, and fell a lot, finishing the month at record lows.
CD rates fell for the 23nd straight month in September, making it increasingly difficult for savers to keep up with inflation.
The average return on all of those investments, except 5-year CDs, is now well below 1%.

That’s become a critical tipping point for savers, because the Consumer Price Index has risen 1.1% over the past 12 months (August 2009 vs. August 2010).

By almost any measure that’s a very modest increase.

After its September meeting, the Federal Reserve’s rate-setting committee seemed more worried about deflation than inflation.

But the Fed has driven interest rates so low that prices don’t have to rise very much to outstrip the pitiful returns on most CDs being sold today.

There’s a real risk those investments could lose buying power by the time they mature – and that’s before savers have to pay taxes on their meager returns.

Bankrate’s weekly survey of large banks and thrifts taken Sept. 29, found the average annual yield for a:

3-month CD is ending the month at 0.22%, down from 0.24% in August and 0.36% at the start of the year. It’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD has fallen to 0.33%, down from 0.36% the previous month and 0.50% at the start of the year. It’s the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD has fallen to 0.57%, down from 0.63% the previous month and 0.82% at the start of the year. It’s the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD has fallen to 0.88%, down from 0.96% the previous month and 1.24% at the start of the year and is the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD declined to 1.68%, down from 1.81% the previous month and 2.10% at the start of the year. That’s the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average returns this low, you’ve got to take advantage of any better-than-average CD rates you can find in our database.

Don't miss out on the next bank deal. Get the newest deals delivered straight to your inbox!

Comments (1)
1 Star2 Stars3 Stars4 Stars5 Stars (3 votes, average: 3.67 out of 5)
Loading...
One Existing Comment
  1. Brad said:
    on October 1st at 11:12 am

    Stock market’s looking better and better, especially with the September rally. But when will the Federal Reserve get off its duff and do something?